Question 1

The set of rules that a U.S.company must follow when preparing its financial statements is called ________.

Accepted Answer

A) AICPA 
B) FASB 
C) GAAP 
D) SOX 
A) AICPA 
B) FASB 
C) GAAP 
D) SOX C

Question 2

Clean Sweep agreed to clean an office building on a weekly basis for $1,000 per week.The contract began on August 15,and Clean Sweep cleaned the building twice during August.Clean Sweep received $1,000 cash in August.During August,Clean Sweep spent $400 on wages for the workers who cleaned the building,$90 for the cleaning supplies used,and $4,000 to purchase specialized cleaning equipment.How much revenue should Clean Sweep recognize in August using accrual accounting?

Accepted Answer

Revenue = $2,000

Question 3

Revenue minus expenses equals net income.

Accepted Answer

A) True 
 B)False  True

Question 4

Ace Electronics bought a new factory for $5,000,000.The factory was originally offered for sale for $5,200,000,but Ace successfully negotiated a lower price.Acme,Inc.was also trying to buy the factory and offered to pay $4,900,000.Ace should record the factory on its books at ________.

Accepted Answer

A) $5,200,000 
B) $5,000,000 
C) $4,500,000 
D) $4,900,000 
A) $5,200,000 
B) $5,000,000 
C) $4,500,000 
D) $4,900,000

Question 5

An accountant discovered a bank error while reviewing the bank statement,and called the bank to correct the mistake.This call is an example of a ________.

Accepted Answer

A) business control 
B) detective control 
C) corrective control 
D) preventive control 
A) business control 
B) detective control 
C) corrective control 
D) preventive control

Question 6

Corrective controls are ________.

Accepted Answer

A) designed to monitor business risks 
B) designed to identify when an error or irregularity has occurred 
C) designed to stop a problem before it starts 
D) directed at recovering from an error 
A) designed to monitor business risks 
B) designed to identify when an error or irregularity has occurred 
C) designed to stop a problem before it starts 
D) directed at recovering from an error

Question 7

Team Shirts had current assets of $2,500,long-term assets of $3,850,current liabilities of $1,450,long-term liabilities of $2,000,and shareholder's equity of $2,900.The current ratio (rounded)is ________.

Accepted Answer

A) 0.72 
B) 1.84 
C) 4.38 
D) 1.72 
A) 0.72 
B) 1.84 
C) 4.38 
D) 1.72

Question 8

Team Shirts purchased $2,000 worth of T-shirts from a company in Guatemala.Team Shirts recorded the value of the transaction in U.S.dollars.Which accounting rule applies to this situation?

Accepted Answer

A) monetary-unit assumption 
B) consistency 
C) relevance 
D) full-disclosure principle 
A) monetary-unit assumption 
B) consistency 
C) relevance 
D) full-disclosure principle

Question 9

An accrual transaction is one in which revenue is earned before cash is received.

Accepted Answer

A) True 
 B)False

Question 10

Before lending money to Brokah,Inc.,you should calculate Brokah's current ratio to measure its ________.

Accepted Answer

A) liquidity,i.e.,its ability to pay its current debts as they come due 
B) ability to turn its noncurrent liabilities into current liabilities 
C) profitability 
D) ability to turn its noncurrent assets into current assets 
A) liquidity,i.e.,its ability to pay its current debts as they come due 
B) ability to turn its noncurrent liabilities into current liabilities 
C) profitability 
D) ability to turn its noncurrent assets into current assets

Question 11

Comparable information ________.

Accepted Answer

A) needs to be current so it can be used to make decisions 
B) can be verified as accurate and truthful 
C) allows users to make comparisons across financial statements 
D) is presented the same way period after period 
A) needs to be current so it can be used to make decisions 
B) can be verified as accurate and truthful 
C) allows users to make comparisons across financial statements 
D) is presented the same way period after period

Question 12

Jem's Jewelers reported the following items on its financial statements.Determine the amount of net income.Then calculate the ending balance for retained earnings.

Accepted Answer

$250,000 - 57,500 -

Question 13

South Seas reported the following items on its financial statements.Determine the amount of net income.Then calculate the ending balance for retained earnings.

Accepted Answer

$300,000 - 180,000 -

Question 14

________ is more rule-based than ________.

Accepted Answer

A) IFRS; U.S.GAAP 
B) U)S.GAAP; IFRS 
C) This is a trick question,since U.S.GAAP and IFRS are the same. 
D) IGAAP; U.S.GAAP 
A) IFRS; U.S.GAAP 
B) U)S.GAAP; IFRS 
C) This is a trick question,since U.S.GAAP and IFRS are the same. 
D) IGAAP; U.S.GAAP

Question 15

Clean Sweep contracted to clean an office building in May for $2,000.The work was completed in May and Clean Sweep received a payment of $1,800.The second payment was received in June.How were these events reported on the May 31 financial statements?

Accepted Answer

The May income statement will

Question 16

Baby Boutique had $150 worth of supplies on hand at the beginning of June.During June,the store paid $600 for more supplies.At the end of the month,a physical count showed $475 of supplies left.How much supplies expense did Baby Boutique have during June?

Accepted Answer

$150 + 600

Question 17

State the most applicable accounting rule for each of the following situations.An accounting rule can be a principle,assumption,constraint,or information characteristic.
1.A $15 wastebasket was expensed when purchased even though it will be used for more than one year.
2.The owner of the business paid for private school tuition and did not list the amount on the books of his business.
3.Team Shirts prepares financial statements in the same manner each year.
4.South Sea's financial statements are prepared within the first week after the close of each accounting period.
5.An external auditor found receipts documenting the purchase of a computerized information system for Team Shirts.

Accepted Answer

1.Materiality; 
2.Se

Question 18

Match between columns
                        Premises: Common stock
Cash
Inventory
Accounts payable
Notes payable
Contributed capital
Retained earnings
Accounts receivable

Accepted Answer

The Answer of Assets and Liabilities and Shareholders' equity is...

Question 19

Denying future credit to customers who are slow to pay their accounts is called a ________.

Accepted Answer

A) business control 
B) detective control 
C) corrective control 
D) preventative control 
A) business control 
B) detective control 
C) corrective control 
D) preventative control

Question 20

An example of a preventive control is requiring that all purchases over $1,000 be authorized by upper management.

Accepted Answer

A) True 
 B)False

The set of rules that a U.S.company must follow when preparing its financial statements is called ________.

Revenue minus expenses equals net income.

Ace Electronics bought a new factory for $5,000,000.The factory was originally offered for sale for $5,200,000,but Ace successfully negotiated a lower price.Acme,Inc.was also trying to buy the factory and offered to pay $4,900,000.Ace should record the factory on its books at ________.

An accountant discovered a bank error while reviewing the bank statement,and called the bank to correct the mistake.This call is an example of a ________.

Corrective controls are ________.

Team Shirts had current assets of $2,500,long-term assets of $3,850,current liabilities of $1,450,long-term liabilities of $2,000,and shareholder's equity of $2,900.The current ratio (rounded)is ________.

Team Shirts purchased $2,000 worth of T-shirts from a company in Guatemala.Team Shirts recorded the value of the transaction in U.S.dollars.Which accounting rule applies to this situation?

An accrual transaction is one in which revenue is earned before cash is received.

Before lending money to Brokah,Inc.,you should calculate Brokah's current ratio to measure its ________.

Comparable information ________.

Jem's Jewelers reported the following items on its financial statements.Determine the amount of net income.Then calculate the ending balance for retained earnings.

South Seas reported the following items on its financial statements.Determine the amount of net income.Then calculate the ending balance for retained earnings.

is more rule-based than .

Clean Sweep contracted to clean an office building in May for $2,000.The work was completed in May and Clean Sweep received a payment of $1,800.The second payment was received in June.How were these events reported on the May 31 financial statements?

Baby Boutique had $150 worth of supplies on hand at the beginning of June.During June,the store paid $600 for more supplies.At the end of the month,a physical count showed $475 of supplies left.How much supplies expense did Baby Boutique have during June?

Denying future credit to customers who are slow to pay their accounts is called a ________.

An example of a preventive control is requiring that all purchases over $1,000 be authorized by upper management.

Business: Whats It All About

Accruals and Deferrals: Timing Is Everything in Accounting

Payment for Goods and Services: Cash and Accounts Receivable

The Purchase and Sale of Inventory

Acquisition and Use of Long-Term Assets

Accounting for Liabilities

Accounting for Shareholders Equity

Preparing and Analyzing the Statement of Cash Flows

Using Financial Statement Analysis to Evaluate Firm Performance

Quality of Earnings, corporate Governance, and Ifrs

Filters

Exam 2: Qualities of Accounting Information

The set of rules that a U.S.company must follow when preparing its financial statements is called ________.

Revenue minus expenses equals net income.

Ace Electronics bought a new factory for $5,000,000.The factory was originally offered for sale for $5,200,000,but Ace successfully negotiated a lower price.Acme,Inc.was also trying to buy the factory and offered to pay $4,900,000.Ace should record the factory on its books at ________.

An accountant discovered a bank error while reviewing the bank statement,and called the bank to correct the mistake.This call is an example of a ________.

Corrective controls are ________.

Team Shirts had current assets of $2,500,long-term assets of $3,850,current liabilities of $1,450,long-term liabilities of $2,000,and shareholder's equity of $2,900.The current ratio (rounded)is ________.

Team Shirts purchased $2,000 worth of T-shirts from a company in Guatemala.Team Shirts recorded the value of the transaction in U.S.dollars.Which accounting rule applies to this situation?

An accrual transaction is one in which revenue is earned before cash is received.

Before lending money to Brokah,Inc.,you should calculate Brokah's current ratio to measure its ________.

Comparable information ________.

Jem's Jewelers reported the following items on its financial statements.Determine the amount of net income.Then calculate the ending balance for retained earnings.

South Seas reported the following items on its financial statements.Determine the amount of net income.Then calculate the ending balance for retained earnings.

________ is more rule-based than ________.

Clean Sweep contracted to clean an office building in May for $2,000.The work was completed in May and Clean Sweep received a payment of $1,800.The second payment was received in June.How were these events reported on the May 31 financial statements?

Baby Boutique had $150 worth of supplies on hand at the beginning of June.During June,the store paid $600 for more supplies.At the end of the month,a physical count showed $475 of supplies left.How much supplies expense did Baby Boutique have during June?

Denying future credit to customers who are slow to pay their accounts is called a ________.

An example of a preventive control is requiring that all purchases over $1,000 be authorized by upper management.

Business: Whats It All About

Accruals and Deferrals: Timing Is Everything in Accounting

Payment for Goods and Services: Cash and Accounts Receivable

The Purchase and Sale of Inventory

Acquisition and Use of Long-Term Assets

Accounting for Liabilities

Accounting for Shareholders Equity

Preparing and Analyzing the Statement of Cash Flows

Using Financial Statement Analysis to Evaluate Firm Performance

Quality of Earnings, corporate Governance, and Ifrs

Filters

is more rule-based than .